Because of the pandemic, the Connecticut real estate market has been booming, and now there’s another hot commodity: small office space.
Connecticut landlords say companies are looking for spaces in which people can have occasional meetings or work as more employees return to blended schedules.
“We’ve seen that people are looking to get an office experience here without having to commute to town five days a week, and that poses a major crisis for our commercial office,” Susan Isaac, agent of Houlihan Lawrence Real Estate, said.
Homes and offices have become synonymous over the past couple of years.
“This goes back to the pandemic, the direction that people were leaving town and really moving around in Connecticut,” Isaac said.
Now, mixed tables are the new standard.
“While they still had home office space, they realized they might not want to go home all day,” said Kim Galton, director of the Houlihan Lawrence retail business group.
For the throngs of employees who have left their day trips to New York and moved to Connecticut, employers are looking for a new option.
“The demand for satellite offices is increasing,” Galton said.
“It’s definitely a hot commodity,” Isaac said. “Just like the housing market, there is high demand and low inventory for a very special type of space.”
Realtors say what companies are looking for is called top-notch office space. These spaces typically range in size from 3,000 to 5,000 square feet to accommodate smaller groups.
They rent $80 per square foot and up. Many landlords ask for a lease of five years or more because the demand is skyrocketing.
“There’s not a lot of new construction going on,” Galton said. This means that people who have stock keep it and renew their leases. The market for subletting office space is also very hot.”
Galton said the demand for first-class office space has increased significantly outside of New York in Fairfield County. Last year, Greenwich’s vacancy rate fell to 7%, well below the 10-year average, according to a Co-Star report.
“A lot of companies that are based in Manhattan, want this luxury address in Greenwich, Connecticut,” she said. “Proximity to the city’s train station is important.”
However, Isaac adds that she sees the trend flowing across the state.
“I think the demand has spread all over Connecticut because the workforce has spread out into Connecticut,” Isaac said. “It doesn’t matter how long it takes to get to town because it just doesn’t happen every day for them anymore. So they can continue to be out of town for an hour, an hour and a half, two hours.”
They say companies are realizing through branch offices, that they can hire and grow within Connecticut, another change driven by the epidemic that realtors believe is here to stay.
“Companies have realized that they do not need all of their partners to come to an office in Manhattan every day of the week,” Galton said. “This allows them to continue the business momentum with the secondary office space.”